00:00On Iran, you called it an excursion. You said it would be over soon.
00:04Are you thinking this week it will be over?
00:05No, but soon. I think so.
00:07Okay, and with respect to...
00:08Very soon. Look, everything they have is gone, including their leadership.
00:14In fact, there are two levels of leadership, and even actually, as it turns out, more than that.
00:19But two levels of leadership are gone.
00:21We're also waiving certain oil-related sanctions to reduce prices.
00:26So we have sanctions on some countries. We're going to take those sanctions off until this straightens out.
00:32Then who knows? Maybe we won't have to put them on. There'll be so much peace.
00:36But when the time comes, the U.S. Navy and its partners will escort tankers through the straight, if needed.
00:44Okay, let's bring in our team, Laura Davison, our politics editor, and on the energy space, Nicholas Lua in Singapore.
00:51Laura, I'll start with you.
00:54So, very soon, can we quantify that in terms of hours, days, and weeks?
01:00We absolutely cannot.
01:01Trump just said very soon, and he intentionally did not specify any time frame.
01:05He was asked, you know, this week. He said not this week.
01:07You know, Trump is sort of famous for saying that he's going to have something done in two weeks,
01:10and that two weeks period never comes.
01:11So I would caution everyone to take this with a little bit of a grain of caution, a grain of
01:16salt here,
01:16that this is, you know, not a developed policy plan coming from the president.
01:20You know, as Yvonne just mentioned, perhaps a signal to the markets to try to calm them down.
01:24But what we're really seeing from the White House, I think it's important to differentiate the policy proposals dealing with
01:29the war
01:29versus the policy proposals dealing with the symptoms of the war, namely high oil prices.
01:33That's where we've seen a lot of the effort, you know, both in terms of actual things we've heard come
01:38from the White House,
01:38in terms of the easing of sanctions, the naval escorts for ships in the Strait of Hormuz.
01:42We have not heard anything from the White House about how this war will actually end.
01:47You know, we've heard Trump, you know, suggest a lot of different things,
01:49but still not a lot of clarity on what he's looking for, whether that's regime change,
01:53whether that is more neutering of the nuclear capabilities, the weapons capabilities,
01:58the military capabilities of Iran.
02:00We still don't know.
02:02Okay. And do we know how Iran, you know, will respond in any way?
02:06You know, have we heard from them on what their perspective is on all this now?
02:09You know, we don't have a great sense of exactly what their steps are,
02:12but they have sort of, this has been a real tit-for-tat scenario of Trump said,
02:15we're going to hit harder, and Iran says, great, we will hit you and your allies in the region back
02:19harder.
02:20They have shown no signs of slowing down.
02:22There is a real question as we head, you know, into, you know, week two of this war is,
02:26you know, what are the capabilities, both of Iran?
02:27You know, Trump has said that their, you know, capabilities have been limited to 10 percent of what it was
02:31earlier.
02:31Not exactly true that that number is quite accurate.
02:34They've been able to do a lot of damage with these relatively inexpensive drones.
02:37You know, we've heard from allies in the region that they're running out of missile interceptors.
02:41There was a meeting with defense CEOs last week to address this.
02:44There's a lot of questions about what both sides can do and how long they can sustain this.
02:49Nicholas, can I bring you in on the oil angle?
02:52And it was, you know, this time yesterday when we were at about 112, we went to as close as
02:57120.
02:58We're back to 90, which is, I think, levels, I forget now, levels of last Friday.
03:04What are the steps that have been taken to ease this melt-up in oil prices?
03:11What have we heard so far?
03:15Laura's already captured all this, I think, David, in that aside from what Trump has said, like that the war
03:20is going to end soon, although not this week, we've not actually had more substantial matter beyond that.
03:26Because other than that, the news that's been coming out has been super bullish, right?
03:29I think what's very clear is that yesterday, after the weekend, where we saw a lot of bullish news, you
03:35know, Kuwait cutting production, UAE cutting production, and then yesterday, Saudi cutting production, we've had a slate of bullish news
03:43that pushed oil up to, like you say, the 120s range, right?
03:46And again, let's be clear, a $30 swing, now, that's been unprecedented.
03:51We've not seen that since the pandemic.
03:53And so I think the markets were looking for something that was bearish.
03:56So the one little bearish thing that Trump said, vague though it may be, sent the whole wall crashing down.
04:03Do you see any sort of relief when it comes to oil supplies and shipping lanes?
04:08Is that forthcoming now?
04:11I would say in terms of concrete action, that's still very limited.
04:15Now, Hormuz is slightly, and I say very slightly, more porous than it was, like over the weekend.
04:20We've seen at least one Greek ship tanker, like, take the risk of switching its navigation signals off and, like,
04:26dash through with Saudi crude.
04:28We've also seen Iranian ships continue to make the pass, but maybe that's not exactly surprising, right?
04:34So there, but that's it for the rest of us, for everyone else who's worried about, like, their tankers, who's
04:40worried about potential strikes on the tankers as they pass through Hormuz.
04:44The straits are still essentially stuck, right?
04:47So in terms of how we've actually changed, how physical flows have actually changed, they've changed very little.
04:52All we've seen is this headline-moving thing that's put it all down.
04:59Nicholas, I want to use maybe an FX overlay here just in terms of intervention risk when you look at
05:05the oil price, right?
05:06But at 120, well, my question is, do you think we've seen this, likely we've seen the ceiling on 120?
05:12Because at about that level, you get the White House somewhat pushing back a little bit.
05:16You get G7 coming out and saying they are prepared to do something more significant to alleviate the oil price.
05:23In other words, while we don't still yet know how this ends, have we at least seen the peak short
05:28term?
05:31So I would say that the peak for this week, maybe this is where we've gone as high.
05:38But I would say in terms of where developments will go in the future, I'll bring you back again to
05:42what Laura said, right?
05:44In terms of concrete developments, how the war is progressing, what Trump's aims are, that's all very unclear.
05:49And so long as these big macro decisions don't get sorted, it looks like we're going to be in for
05:55a protracted conflict, right?
05:56So I think we're going to be here for a very long time.
05:59And let me say again, in terms of actually how oil markets have been impacted, most of the crude coming
06:05out of the Gulf isn't flowing.
06:08Most of the oil products, the gasoline, the jet fuel, the diesel that people need to keep the global economy
06:13running,
06:14to keep the middle classes going on their holidays, that's not coming.
06:18And again, the Gulf is a major supplier.
06:21And so without that, eventually all of this is going to have knock-on across the global economy,
06:26and that will be reflected in the oil prices.
06:28So is 120 the limit?
06:30I don't think so.
06:31I think we're meant for more.
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